CAMBRIDGE, MA – A collapsing economy combined with further deterioration of the housing market continues to suppress remodeling activity according to the Joint Center for Housing Studies of Harvard University. The Leading Indicator of Remodeling Activity (LIRA) points to homeowner improvement spending declining at an annual rate of 12.1 percent by the third quarter of 2009.
“Uncertainty in the housing market continues to stifle spending on homeowner improvements,” notes Nicolas P. Retsinas, director of the Joint Center for Housing Studies. “In light of escalating job losses, consumers are reluctant to undertake major remodeling projects.”
The market has seen steady declines since the middle of 2007, although recently the rate of decline has flattened. “While we may be nearing the bottom of the remodeling cycle, there is little to push spending back into a growth phase until the economy recovers,” explains Kermit Baker, director of the Remodeling Futures Program of the Joint Center.
The second quarter 2008 release introduced a re-benchmarked LIRA, which was necessitated by the recent discontinuation of the U.S. Census Bureau’s Residential Improvements and Repairs Statistics, also known as the C-50 series. The LIRA now projects future trends in homeowner improvement activity, where previously it estimated trends in both owner improvements and maintenance and repairs. A full description of the re-benchmarking of the LIRA can be found in “Addendum to Research Note N07-1: Re-Benchmarking the Leading Indicator of Remodeling Activity” (N08-1). The LIRA is released quarterly (April, July, October and January) by the Joint Center’s Remodeling Futures Program during the third week after each quarter’s closing. The next release date is April 16, 2009.
The LIRA measures and projects only a portion of the U.S. home improvement market, namely spending by homeowners on property improvements. Other components of the broader market—spending by homeowners on maintenance and repairs, and spending on improvements, and maintenance and repairs for rental and vacation property—are not included in the LIRA figures.